How to answer four knotty questions about compensation management

Compensation management question will become progressive more difficult as business goes down

“But I’ve got bills to pay. How do you expect me to live without a raise?”

Okay, compensation management conversations are tough. If somebody says this to you when you tell him or her you got a freeze going on. That sounds like a child talking to you and saying, they want because they want it. Consider the tone and the temperament here, you want to get them out of the child-mode by talking to them about compensation management like an adult to an adult.

Address them like an adult even though they addressed you as if they were a child and you’re their parent. You want to say back to them that, “Look, you know, maybe you’ve read the paper or watched the news, but there’s a lot of turmoil in the marketplace right now. And this we’ve tried to communicate to you. Everybody’s tightening their belts, all the people in your company.”

Them like an adult share with them the obvious about your company’s compensation management, that this is not a personal thing, that this is tough for them, you get that, it’s tough for you too. They’re not going to feel sorry for you, so, don’t play it too heavy. Let them vent a little bit and tell them you need their help and cooperation, to work hard, so all of you can get it back to prosperity

“I’m a star performer. Last year, I got a 10% raise, why should I accept only 3% this year?”

Again, do you hear the petulant child in all that? My bet is when you gave him the 10% last year, it wasn’t only merit based that got that. They probably got bumped a level or they were so far down the compensation management scheme; we had to bump them up artificially.

“We’re trying to talk to you more like adults now and you know, the honest truth is, some of that raise last year came from other things. That 3% is market average this year, you’re above midpoint. Now, that you’re above midpoint, this kind of is where we’re going to be. Here’s the kind of stuff you can do if you wanted to earn more money, you know. As we’ve talked about, there’s another level for you, we’ve love to see you get there. Here’s what you’ve got to do to get promoted.”

It would behoove you to have a big conversation with them about compensation management as a class and then when you get in to this as individuals, you can say, “As we’ve talked about, you know, in the past, we really kind of haven’t been, you know, giving you all the facts. We’ve just been doing what we’ve been doing.”

So, redirect the conversation about compensation management. Try to get them out of the petulance. Try to get them out of the kid and into the adult.

“I know, I’m not management material, but does that mean, I’m stuck with cost of living salary increases forever?”

Again, this kind of communicates the notion that managers have it better than the rest of us. Managers are on the exact same scheme that everybody else is. Managers have an end to their salary structure too. There’s an end to their range. It’s just a click or two higher than yours.

Every salary scale in a compensation management plan has a ceiling. It’s not a management thing, it’s an everybody thing.

The action in compensation management is not with base pay. The action is with promotions and the action is with the big jobs, it’s with the bonuses. And bonuses are more prevalent for the higher jobs.

“I know, I’m working off-site three days a week this year, but why do you decrease my salary? I do the same amount of work?”

“We’re making this move because of our efforts to stem the tide here, not because we’re happy about making them but that’s how we tried to neutralize the effect on you. We need you to do the same amount of work, by the way because despite the fact that you’re at home, we got to have it. We need it now more than ever.”
Now, that’s a tricky one. I suspect that, if you decreased somebody’s salary under your compensation management system because you moved them off-site, you’re doing that because you got to make some tough economic decisions. It is usually part of a consolidation and cost-cutting effort. Your way of trying to rationalize your compensation management decision with them is, “Look, those are days you don’t have to drive back and forth to the office, pay for parking, pay for daycare, you know, those are days in which you don’t have to buy or wear fancy clothes or have them laundered.”

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